Equality can’t be mandated by law

Daniel Knowles

15 October 2010

It is not clear whether the producers (or the politicians for that matter) intended it, but a new British film about equal pay – Made in Dagenham– has been released at the same time as the new Equality Act passes into law. Both celebrate the principle of equal pay, and lament the continuing “pay gap” between men and women. Both also fall victim to one of the most damaging fallacies of government – the idea that you can mandate equality.

Equal pay for equal work is a good slogan. In a free market, people should be rewarded according to their productivity, not their gender or their race. In 1960s Dagenham (among other places), women were frequently paid a lower wage for performing essentially equal work as men. Companies were able to get away with it because the number of jobs that women could do was artificially limited, whilst the trade unions mostly only stood up for men. Consequently, women had less market power than men, and in the deeply uncompetitive 1960s British economy, that meant that they got lower wages.

That was wrong, and it was right of feminists, politicians and of course women workers themselves to oppose it. It may even have been right for the upholsterers at Dagenham to go on strike. But here is where both government and film go wrong. In a market economy, passing a law demanding equal pay doesn’t get equal pay. After the first round of equality legislation was introduced, many employers simply redefined women’s jobs or else sacked them. Often they did so in collusion with male dominated unions.

The only way to get equal pay for women is to give them equal market power. Breaking up monopolistic unions in the 1980s helped do that. So did the cultural changes which have made it acceptable for a woman to be an executive, or a lawyer or even the Prime Minister. The free market has been of tremendous benefit to women - and the current position of women in the Western world is arguably better than at any point anywhere else in history. Symbolic value aside, however, the equality legislation had almost nothing to do with it – the pay gap had in fact been narrowing for years before it was even passed.

There is still a sizeable difference between what the average man and the average woman earns – the gap is now around 12% less for full time employees or 22% overall (more part time workers tend to be women, and part time workers tend to be worse paid). That is mostly not because women are paid less for equal work, however. Rather it happens because women still tend to take different jobs to men. There are still important cultural and social battles for feminists to win – but they will not win them by enlisting the government. Genuine equality is something that has to be fought for, by strike, by pen and by megaphone. It can no more be mandated by law than the tide can be ordered back by a king.

I’m rather a fan of the Parable of the Vineyard [St. Matthew, ch. 20], where different workers all get paid a penny for their labour, even though some of them work much less than a full day. I interpret the story to be more about upholding individual contracts than ‘equality’.There are reasons to expect, in a free market, that wages will tend towards equality for equal work (though there can be many aspects to ‘equality’ of work). So reducing obstacles to free markets (such as government interference) is likely to help ‘equal’ outcomes.But local actors may be conscious of relevant distinctions that central planners are content to ignore — an aspect of Hayek’s ‘division of knowledge’.

Submitted by Ian R Thorpe on Fri, 15/10/2010 - 18:29.

It has always been a feature of politically correct left wing thinking that they believe human nature can be changed by the passing of laws.

Submitted by D Smith on Tue, 26/10/2010 - 14:32.

You may be interested to investigate the effects of minimum wage legislation on the gender pay gap. This shows that law can improve equality. It is also worth noting that there is a strong correlation between union membership and lower gender pay gaps at both the national and firm level – debunking your ‘breaking up the unions’ assertion. You note that “the current position of women in the Western world is arguably better than at any point anywhere else in history”, yet the UK ranks 42nd in the Global Gender Gap index on the economic participation and opportunity index, one place ahead of China and below, among others, Kenya, Uganda, Thailand and Kazakhstan.

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